Market Summary

Yield Movements

Between 1 December 2024 and 28 February 2025, local currency (LCY) government bonds yields in Malaysia were broadly unchanged on expectations for Bank Negara Malaysia to keep its policy rate. On 6 March, Bank Negara Malaysia maintained the overnight policy rate at 3.0%, amid moderating inflation and a positive growth outlook.

Local Currency Bond Market Size and Issuance

The total LCY debt stock of Malaysia rose to MYR2.1 trillion on a modest 0.8% quarter-on-quarter (q-o-q) growth in the fourth quarter (Q4) of 2024, from 0.9% q-o-q in the previous quarter. The government and corporate bond segments expanded 0.6% q-o-q and 1.0% q-o-q respectively, on reduced maturities during the quarter. On the other hand, total LCY bond issuance fell 23.5% q-o-q in Q4 2024 driven by a 43.4% q-o-q contraction in government issuance as the Government of Malaysia frontloaded annual issuance in the earlier quarters.

Sustainable Bond Market

Malaysia's sustainable bond market tallied USD15.4 billion at the end of December, reflecting a 0.1% q-o-q contraction in Q4 2024, with sustainability bonds making up 70.8% and green bonds 19.0% of the total. Corporate bonds dominate a majority (77.2%) of the sustainable bond market, 59.7% of which carried maturities longer than 5 years. Outstanding government-issued sustainable bonds only carried maturities of over 5 years.